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Government of India Ministry of Textiles Address by V.Srinivas, IAS ...

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<strong>Government</strong> <strong>of</strong> <strong>India</strong><br />

<strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong><br />

<strong>Address</strong> <strong>by</strong> V.<strong>Srinivas</strong>, <strong>IAS</strong> Joint Secretary to <strong>Government</strong> <strong>of</strong> <strong>India</strong> as the Chief<br />

Guest at the Annual General Meeting <strong>of</strong> the Northern <strong>India</strong> <strong>Textiles</strong> Mills<br />

Association held at the PHD Chambers <strong>of</strong> Commerce dated January 18, 2013<br />

President NITMA Shri K.K.Agarwal ji, Vice President NITMA Shri Sharad Jaipuria ji, my<br />

senior colleague Smt. Prerna Sood ji and distinguished members <strong>of</strong> NITMA,<br />

1. It gives me immense pleasure to address NITMA’s Annual General Body Meeting<br />

and share with you <strong>Government</strong>’s views in the run up to the implementation phase <strong>of</strong><br />

the 12 th Plan. This is my first interaction with NITMA in an Annual General Body meeting<br />

as I could not attend the previous 2 meetings. That said, we in <strong>Government</strong> have<br />

interacted with President NITMA in 52 meetings this year, which is almost one meeting<br />

a week. The frequency <strong>of</strong> interactions on a diverse range <strong>of</strong> subjects ranging from<br />

consultations on scheme formulation to industry concerns with extant <strong>Government</strong><br />

policy represents the emphasis <strong>Government</strong> has placed in its engagement with NITMA.<br />

2. The year 2012 has been immensely challenging in terms <strong>of</strong> policy formulation.<br />

The slowdown in the textiles industry in the backdrop <strong>of</strong> price volatility in cotton and<br />

cotton yarn, necessitated formulation <strong>of</strong> debt restructuring proposals amounting to Rs.<br />

35000 crores. <strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong> in consultation with <strong>Ministry</strong> <strong>of</strong> Finance and Reserve<br />

Bank <strong>of</strong> <strong>India</strong> enabled a consensus decision that the debt restructuring <strong>of</strong> textiles<br />

industry will be undertaken under the RBI’s prudential guidelines <strong>of</strong> 2008. Many <strong>of</strong><br />

NITMA member mills would have benefitted from the debt restructuring exercise<br />

conducted <strong>by</strong> Banks in the period August-November 2012.<br />

3. By the latter part <strong>of</strong> the year, I notice that textiles mills have turned around in the<br />

backdrop a commodity trade boom in cotton yarn exports and moderate cotton prices.<br />

Cotton yarn exports are likely to reach 1000 million kilograms this year which represents<br />

an all time high for cotton yarn exports from <strong>India</strong>. Please accept my compliments on<br />

this strong performance.<br />

4. President NITMA in his address has asked me to elaborate on the modalities <strong>of</strong><br />

implementation <strong>of</strong> TUFS in the 12 th Plan. TUFS, as you are aware, represents the<br />

flagship scheme <strong>of</strong> the <strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong>, and has been the engine <strong>of</strong> growth for the<br />

textiles industry. The TUFS has been recommended <strong>by</strong> the Planning Commission for<br />

continuation in the 12 th Plan and approved <strong>by</strong> the National Development Council. A plan


allocation <strong>of</strong> Rs. 12077 crores has been proposed for TUFS in the 12 th Plan to catalyze<br />

an investment <strong>of</strong> Rs.1,51,000 crores. The modalities <strong>of</strong> implementation are on the lines<br />

<strong>of</strong> the Restructured TUFS that was implemented for the period 2011-12 and 2012-13.<br />

<strong>Textiles</strong> industry has raised issues with regard to schematic architecture <strong>of</strong> the<br />

Restructured TUFS. Industry has said that the sectoral caps have disincentivized<br />

spinning and technical textiles where the sectoral caps have been reached and a<br />

backlog <strong>of</strong> applications is witnessed. The Modified TUFS was implemented as an open<br />

ended scheme with neither value caps nor sectoral caps. <strong>Government</strong> felt that the<br />

absence <strong>of</strong> sectoral caps/ value caps resulted in a lack <strong>of</strong> transparency in committed<br />

liabilities making plan allocations for TUFS extremely difficult. We are trying to address<br />

the issue in the 12 th Plan to best achieve a balance between the sectoral caps for<br />

sectors where <strong>India</strong> has achieved economies <strong>of</strong> scale and removal <strong>of</strong> sectoral caps in<br />

sectors where investments need to be catalyzed.<br />

4. Restructured TUFS did not provide for subsidy allocations for cases sanctioned<br />

in the black out period. The issue has been raised <strong>by</strong> NITMA as also other industry<br />

associations. <strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong> has taken up the matter with <strong>Ministry</strong> <strong>of</strong> Finance on the<br />

feasibility <strong>of</strong> covering the cases sanctioned <strong>by</strong> Banks in the period July 2010 to April<br />

2011 under the TUFS umbrella. We hope for a decision in this regard in the coming<br />

months.<br />

5. A high interest rate regime and weakening macroeconomic climate has resulted<br />

in a slowdown in TUFS loans sanctions and investments. Despite the slowdown in<br />

investments, Restructured TUFS has catalyzed Rs. 35000 crores <strong>of</strong> investments in<br />

2011-12 and 2012-13, which is a significant investment in years <strong>of</strong> economic slowdown.<br />

6. We have been in consultations with President NITMA on 2 issues raised <strong>by</strong><br />

Chairman AEPC in the run up to the Union Budget 2013, namely the reduction in import<br />

duties on cotton yarn and cotton fabric to 3% and 5% respectively. As you are aware,<br />

<strong>India</strong>’s RMG exports have witnessed a (-)9 percent growth in the year 2012-13. Apparel<br />

industry has indicated that access to cheaper sourcing <strong>of</strong> raw materials would enable<br />

their industry to revive growth. NITMA, CITI and SIMA have all opposed this proposal.<br />

<strong>Government</strong> will seek to build a consensus before moving forward on this sensitive<br />

issue.<br />

7. <strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong> has placed a great deal <strong>of</strong> emphasis on transparent and real<br />

time statistics collection for the cotton balance sheet. A Cotton Distribution (Collection <strong>of</strong><br />

Statistics) Bill 2012 was formulated, placed in public domain and circulated for inter<br />

ministerial consultations. We have been advised <strong>by</strong> the <strong>Ministry</strong> <strong>of</strong> Statistics and<br />

Program Implementation that in the interregnum to the formulation <strong>of</strong> the legislation,


<strong>Ministry</strong> <strong>of</strong> <strong>Textiles</strong> could use the delegated powers under the Collection <strong>of</strong> Statistics Act<br />

2008 read with Collection <strong>of</strong> Statistics Rules 2011 to identify an informer base and<br />

prescribe statistical formats for collection <strong>of</strong> data on real time basis. A draft notification<br />

for collection <strong>of</strong> statistics from ginning factories, traders and textiles mills with the<br />

<strong>Textiles</strong> Commissioner as statistical authority is being formulated. We hope to put the<br />

notification in place in the coming weeks.<br />

8. I am also informed that several <strong>of</strong> NITMA’s member mills have accessed the<br />

services <strong>of</strong> NITRA for skill building initiatives under the Integrated Skill Development<br />

Scheme. The ISDS is envisaged to train 15 lac textiles workers in the 12 th Plan with an<br />

allocation <strong>of</strong> Rs. 1900 crores. I have also been in consultation with President NITMA on<br />

the restructuring <strong>of</strong> the <strong>Textiles</strong> Workers Rehabilitation Funds Scheme.<br />

9. Let me once again thank President NITMA and all distinguished <strong>of</strong>fice bearers for<br />

giving me this opportunity to address members at the Annual General Body Meeting. I<br />

wish the association all success in its challenging future endeavors.<br />

10. Thank you.<br />

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